SAP’s quarterly revenue beats estimates, trims 2022 profit outlook

SAP’s quarterly revenue beats estimates, trims 2022 profit outlook

A logo of the SAP exhibit space at the Viva technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France, on June 15, 2022. REUTERS/Benoit Tessier

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STOCKHOLM, July 21 (Reuters) – SAP ( SAPG.DE ) reported a 13% rise in second-quarter revenue on Thursday, beating estimates for growth from its cloud business, although the German business software group trimmed its profit outlook for the year due to the war in Ukraine.

SAP, which makes software for business process management, is moving from software licenses with up-front fees to subscription-based cloud services.

“Our transformation to the cloud is ahead of schedule and we’ve exceeded top-line expectations, with cloud revenue becoming SAP’s largest revenue stream,” CEO Christian Klein said in a statement.

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The company’s cloud revenue rose 34% to 3.06 billion euros ($3.12 billion) in the quarter. Current cloud backlog, which measures incoming business, was up 34% to 10.40 billion euros.

However, the company lowered its 2022 adjusted profit outlook to between 7.6 billion euros and 7.9 billion euros, with a range of 7.8 billion euros to 8.25 billion euros.

SAP cited a 350 million euro impact in constant currency on adjusted profits from the war in Ukraine and a possible decline in software license revenue.

The company’s departure from Russia and Belarus due to the war in Ukraine resulted in approximately 120 million euros in severance payments to employees and loss of assets.

“The exit is still ongoing. We have informed our employees and they will be leaving the company by 2022,” Klein said in a call with reporters.

“There are also several employees who may work for us from other places, but by the end of the year we will complete the exit and I do not expect a figure above 350 million euros.”

Total quarterly revenue rose to 7.52 billion euros in constant currency from 7.08 billion euros. Analysts had expected 7.32 billion euros, a Refinitive survey showed.

Adjusted earnings per share were 28 cents, below estimates of 44 cents, mainly due to a lower contribution from an investment in venture capital firm Sapphire Ventures.

Sapphire Ventures’ contribution fell by almost 1 billion euros compared to last year.

($1 = 0.9798 Euro)

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Reporting by Supanth Mukherjee in Stockholm; Editing by Sherry Jacob-Phillips and Kim Coghill

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